Pocketing The Greens Case Study: Cheap Pharma Inc.

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Pocketing the Greens Case Study

1. Immediate Issue(s) or Problem(s):

In Pocketing the Greens case, a member of the Board of Directors of a pharmaceutical company called Cheap Pharma Inc. (CPI) named Mr. De Guzman as well as two other directors are being sued by the shareholders of CPI. The reason being that these three members of the board profited from a transaction they made with CPI 's competitor and potential business partner named GreenMed (GM). Should Mr. De Guzman and the others render an accounting and return whatever profits they made from their transaction with GM to CPI?
CPI and GM, as aforementioned, are competitors in the market. These two are both pharmaceutical companies but GM is an insolvent company famous for its "innovative
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De Guzman and two other members of the board, CPI approached GM with a business proposal: that CPI will buy shares of stocks from GM in exchange for use of GM 's patents. This will allow CPI to develop a new product line using its very own traditional herbal medicine. The Board of Directors of CPI approved the company 's purchase of said stocks and even passed a resolution to pay 10 million for the shares. For GM 's part on the other hand, through Dr. Gonzales, it has agreed to sell shares of stocks proportionate to the amount CPI is willing to pay. With these terms, the two companies then entered into a negotiation with Mr. De Guzman as the negotiator of CPI and Dr. Gonzales as GM 's representative. But, by a twist of fate, CPI 's second largest factory in Novaliches that contributes to about 30 percent of their production burned down due to an overheated machine. Mr. De Guzman and the two other board members ended up buying the shares of stocks initially being sold to CPI. Given these pieces of information, did the three directors did CPI…show more content…
Acosta, the Philippine law defined contract as "a meeting of the minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service (Article 1305, New Civil Code of the Philippines)." She added that, "When two parties come together and agree on the terms and conditions of their contract, such terms and conditions have the force of law between them and, thus, must be complied with in good faith (Article 1159, New Civil Code of the Philippines)." But for the contract to be valid, Article 1318 of the New Civil Code had three conditions: "(1) there is consent among the contracting parties; (2) there is a certain object that is

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